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Case study 3: Victory SAOG is registered with an authorized capital of OMR 50 million ordinary shares of 100 baiza each. The company had issued

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Case study 3: Victory SAOG is registered with an authorized capital of OMR 50 million ordinary shares of 100 baiza each. The company had issued and paid up capital of OMR 33 million. In the year 2017 Victory SAOG has an outlined share repurchase program which would enable the company to repurchase at least 10 per cent of its outstanding shares. The company had an opening balance of OMR 55 million in its retained earnings account After completing the required formalities for such repurchase in the year 2017, the company was able to repurchase the 19.8 million shares valued at OMR 31,680,000 in the mouth of August. Later in the year 2019 the company was able to repurchase another 10 million shares for OMR 15 million in July The following are the profits camed by the company over the period of 2017 to 2019: OMR in Millions 2017: 110 2018: 150 2019: 160 The company decided to distribute dividends as mentioned below: 2017 2018 2019 Interim dividend Nil 5. Nil Final dividend 10. 15% Final dividends are proposed in same year but always approved and paid in the succeeding year. You are required to evaluate the overall scenario and answer the following questions: a. Was the company able to achieve its target with its shares repurchase program, justify your answer with suitable calculations? Also briefly discuss as to why does a company voluntarily give millions of Rials back to stockholders in order to repurchase its own stock instead of investing such money in its own business? (3 marks - Min 150 words) b. Provide with all necessary calculations the accounting treatment for such repurchase of shares transactions? (3 marks) c. Provide with all necessary calculations and accounting treatment with regards to dividends and retained earnings for the period 2017-2019? (4 marks) 20

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